Market Review – Fundamental Perspective 17 November 2017

US equity markets finished the day in the green yesterday boosted by stronger than expected earnings from a number of major companies including Walmart and the passing of the Republican tax bill in the House of Representatives later in the evening.
USD held steady throughout most of the day but came under pressure overnight and DXY fell c.0.4% with some citing news that Special Council Mueller’s subpoenaed Trump’s campaign for Russia-related documents in mid-October.
The House tax bill passed as was widely expected and focus will now shift to the Senate version of the tax bill with a vote expected in the week after Thanksgiving. The Senate tax plan differs from the House version on a number of points which could complicate reconciliation.
GBP traded in a relatively tight range against USD in yesterday’s session and a small beat in UK retail sales (actual: -0.3% y/y vs. consensus: -0.4% y/y) had little impact in FX.
David Davis warned EU negotiators not to put politics ahead of prosperity at an economic conference in Berlin yesterday and when asked about the payment to be made to the EU he said that it would be another few weeks before he would answer that.
GBPUSD has opened higher this morning mainly on the back of overnight USD weakness. Support remains around 1.3000-1.3060 with resistance at 1.3340. In EURGBP, support comes in at 0.8730 with resistance at 0.9050.
India’s sovereign credit rating was upgraded to Baa2 from Baa3 by Moody’s today which is likely to reinforce INR stability and outperformance among EM currencies.

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